so I just saw a post that Wendover
Productions is suing honey and PayPal in
a class action lawsuit and I just had to
get this to you first thing so let's
take a look at what's going on it's the
beginning of a much longer effort to
hold honey and PayPal accountable for
what they've done if if if they have
actually done anything wrong in the
contract sense in the legal sense
certainly I think we can all agree that
the the scam of it the misdirection of
it is unethical or immoral but we kind
of expect that from corporations in a
capitalistic
Society but still it was probably some
kind of misleading that none of the
influencers knew that honey was doing
this and seems like maybe lonus Tech
tips figured it out a couple years ago
and just quietly separated their
relationship with honey as you do when
you are operating a major media
Enterprise you can't go around upsetting
everyone so let's take a look at what
was filed so it's been filed in the
United States District Court federal
district court for the Northern District
of California in the San Jose division
well that's that's exactly where a major
company like PayPal or honey is going to
be Wendover might even be somewhere
there I don't know we'll see in a moment
when we get to that part of the lawsuit
so this is W over Productions versus
PayPal cuz I guess honey is part of
PayPal maybe not a separate entity and
it's a class action complaint for
intentional interference with
contractual relations intentional
interference with prospective economic
relations and for injunctive Relief
basically business relations plaintiff W
over Productions and businessing LLC
plead on their own behalf and others
similarly situated as a class action
make the following allegations
plaintiffs are content creators who earn
a substantial amount of their revenue
through contracts for promoting products
and services plaintiffs are paid when
they send followers or subscribers to
purchase the products of their
contractual Partners the final step of
the transaction that pays both the
contractual partners and the plaintiffs
through a commission is a checkout page
on a web browser plaintiffs have
affiliate link which tell their Partners
this sale was sent by me it is the same
as a salesperson getting acknowledged
when the customer goes to the cash
register this was the uh this was the
analogy made by was it mega mega lag
that uh exposed this thing in the first
place this case involves a scheme by
defendant to unlawfully supplant
affiliate links from content creators
with its own affiliate links via honey
thereby redirecting commission or
tracking on those affiliate links to
defendant so if you're not familiar with
the scam I'll put a link to Mega lags
video or the the big video that
everybody was watching um honey is a
extension a browser extension where you
can look for coupon codes well when you
go to look for the coupon code using the
browser extension it changes the
affiliate link it even changes the
affiliate cookie so this means that wend
over Productions has an affiliate link
well honey replaces the affiliate link
with Honey's affiliate link gives the
customer the coupon discount which it
turns out there's also Shenanigans there
where the website and honey have control
over which coupon codes the customer
sees so you can actually direct honey
not to show a coupon code if you wanted
to uh as far as as far as I understand
from from the video that I saw so if
this is true then they are taking away
the affiliate link and keeping that
affiliate link money for themselves in
addition to whatever else they make
money off of in their company defendant
PayPal owns honey honey is a browser
extension which purports to find
consumers the best deal at checkout by
scanning for discount codes content
creators whose commissions were
redirected are entitled to damages under
torous interference theories defendant
via honey has standardized practices and
procedures which all content creators
are subject to the appropriate vehicle
for recover recovery is this class
action lawsuit so we are in San Jose
District venue is proper a substantial
portion of the events happened in this
District defendant has its principal
place of business in this District honey
is a browser extension free to Consumers
which purports to automatically look for
discount codes when consumers shop on
select sites to provide customers or
consumers with the biggest savings
available defendant owns and operates
honey that's PayPal defendant has
partnered with 30,000 businesses or more
to include honey in the online checkout
process for any consumer who has
downloaded the browser extension these
are defendants Merchant Partners in the
lawsuit plaintiffs are content creators
with large followings on YouTube
Wendover has 4.7 million subscribers 240
videos Etc Wendover regularly partners
with businesses including the merchant
Partners to promote products in his
videos he has partnered with businesses
such as nordvpn ground news Audible and
Brilliant when plaintiff promotes
products payment comes from the business
with whom he has partnered and who is
selling the product plaintiff posts
videos approximately twice per week
including all videos posted across all
channels and they are all monetized when
plaintiff promotes a product it promotes
it with a affiliate link by which
viewers can access the product on the
business's website and purchase it if
they so choose the affiliate link tracks
how many customers were acquired via
plaintiff's content if you're not
familiar with this if you click on a
link from one of these Youtubers with
like a buy this product you know they
review a product and they have a link to
buy the product that link might go to an
official website like BH photo video for
a video camera or something like that
but when you click on a Gerald undone
video with an affiliate link it goes to
bhoto video slash something that tells
it it's coming from Gerald undone or
from some other YouTubers wover
Productions uh video If you manually
removed that tracking code which is just
a tracking code affiliate code part of
the URL if you manually remove it you
will still get to the product page and
you will still be able to buy the
product or service and the influencer SL
YouTuber whatever will not get the
affiliate
income this is what honey was doing
allegedly is changing that affiliate
code to their own affiliate code so they
get the affiliate income even though you
got to the website through a different
affiliate like they said in the video
it's like if you go buy something from a
salesperson that on commission and right
before the salesperson gets their
commission some other salesperson comes
along and takes the commission it it's
it's Shady at best and illegal at worst
the affiliate link tracking is necessary
in determining how successful plaintiff
was in driving traffic to the business's
website and acquiring customers
plaintiff's contractual business
partners regularly evaluate whether
plaintiffs are overperforming or
underperforming regarding the business's
Benchmark for average customer
acquisition costs the businesses track
how many customers have been acquired
via plaintiff's affiliate link and
divide that number into the flat fee
paid to plaintiffs to determine if
customer acquisition is less or more
cost cost L via plaintiffs than the
average if plaintiffs are overperforming
if the business acquires many customers
through the affiliate links then that
business partner is more likely to renew
contracts with plaintiffs and offer him
better terms on future contracts the
affiliate link tracking therefore plays
a crucial part in defining the future
business relationship with plaintiff's
business partners affiliate link
tracking relies on last click
attribution which is a model that
credits the last touch point a customer
interacted with before making a purchase
as the cause of the conversion so
converting to a sale who's the person or
entity that the customer last interacted
with that causes the sale they get the
affiliate income but here honey is
taking it instead last click attribution
is the industry standard and is the
model by which all or most of
plaintiff's business partners operate
last click attribution relies on a
affiliate cookies to notify businesses
where certain sales originated from
plaintiff businessing runs a similar
operation but with separate categories
of influence one Ali spagnola's Fitness
outrageous has over 50,000 subscribers
on YouTube another at Ali Spagnola has
approximately 2.25 million subscribers
for Miz spagnola's outrageous art and
outrageous music for outrageous people
businessing has similar affiliate
agreements with third parties defendant
takes advantage of last click
attribution by inserting a honey popup
at checkout for each customer that has
installed the honey browser if the
customer clicks on the honey link after
clicking on plaintiff's affiliate link
then defendants affiliate cookie
replaces plaintiffs or that of any other
content creator who uses affiliate links
and this is the big freaking deal in
other words if a customer clicks on one
of plaintiff's affiliate links and then
directly purchases the product the
business will see that the sale
originated from plaintiff's affiliate
link however if the customer clicks on
plaintiff's affiliate link and then the
honey popup then the business tracks the
sale as originating from honey and
plaintiff will receive no credit for the
purchase honey erases plaintiff's
affiliate links and replaces it with one
of its own if the consumer clicks on the
honey popup at any point during checkout
honey will receive credit for the
purchase even if it did not provide any
discount codes to the consumer even if
it did not provide discount codes
because honey disrupted the last click
attribution for clicks that should have
been attributed to plaintiffs plaintiffs
were responsible for customer
acquisition that was unable to be
tracked by his business partners because
honey disrupted that last click
attribution plaintiff's performance in
regard to customer acquisition has been
artificially and negatively skewed
defendants actions prevented plaintiff's
business partners from counting all
customers that were acquired via
plaintiff affiliate links defendant is
aware that its honey browser extension
takes credit for customer acquisition
for which it is not responsible and for
which were the honey browser extension
not in place plaintiffs and other
content creators would be properly
credited defendants actions have damaged
plaintiff's relationships with business
partners defendants actions have caused
plaintiffs to receive less favorable
contract terms from his business
partners and or led to a failure to
renew contracts with business partners
so in other words you you you're
tracking your business how good is your
business how good is your marketing this
is a big deal if you're not getting a
return on your marketing dollars you
need to change your marketing efforts or
you're just wasting money and it's
really easy to waste a lot of money on
marketing or to lose a lot of money when
marketing didn't go the way it was
supposed to and your good product or
service doesn't get the attention it
deserves this is a big freaking deal
when one company interferes with another
company's ability to make money in an
underhanded misrepresenting fraudulent
scammy way
it's it is exactly deserving of a class
action lawsuit and I'm really glad to
see that this is
happening I'm sure PayPal will have its
own defense I'm not saying that this is
an easy win we'll go over that in a
moment defendant benefited by disrupting
last click attribution which should have
been attributed to plainst by receiving
credit for customer
acquisition because defendant received
credit for customer acquisition
defendant benefited at plaintiff expense
they're setting up some kind of unjust
enrichment argument even if it's not a
explicit claim now they're going to
attack PayPal as a class so obviously
everyone knows what a class action
lawsuit is in concept you know multiple
plaintiffs Sue one defendant in any
class action the proposed leader of the
class needs to make a argument for why
they should have a class action why they
should lead the class Etc so you have to
define the class and you have to define
the class in a way that limits the scope
of the case to the appropriate people
not more people than were affected by
honey and not less so the class is
defined as all persons which includes
companies from December 29th 2022 to the
time of class certification why because
there's probably a 2-year statute of
limitations on these kinds of
allegations all persons who contracted
with any business to promote a product
or service and provided to consumers an
affiliate link that led consumers to a
checkout page which Incorporated the
honey browser extension so going back 2
years anybody who did affiliate link
whatever I I I may be in this class as
well because I've had affiliate links
especially with um audible not sure if
honey was doing anything with audible
but we'll find out about that excluded
from this class are employees officers
director of defendant attorneys peering
in this case any judge assigned to hear
this action normal the questions for the
class are did defendants policies and
practices effectively steal attribution
from members of the class did defendant
profit from customer acquisition which
was otherwise generated by members of
the class themselves instead of
defendant did defendant's actions in
stealing attribution damage the
Creator's
relationship between defendants Merchant
partn partners and members of the class
whether defendant intentionally damaged
their relationship because
intentional willfulness will multiply
damages or potentially lead to sanctions
plaintiffs are adequate Representatives
yeah I think so I think we've
seen we'll see in a moment who's behind
this if you don't know already it's kind
of fun you like it's went over
Productions but it's also the damages
sought by each member are such that
prosecution would prove burdensome yeah
it's too complex for the courts to
handle every single lawsuit 30 50 100
different lawsuits when you could have
100 plaintiffs in one lawsuit instead so
they are asking in their causes of
action these are the claims intentional
interference with contractual relations
defendants knew contractual
relationships existed between plaintiffs
and the and the merchant Partners
defendant knew its Merchant partners
collaborated with plaintiffs and drove
traffic to Merchant Partners websites
via affiliate links defendants conduct
prevented performance of plaintiffs of
their contractual obligations or made
performance more expensive or difficult
defendant intended to disrupt the
plaintiff performance or knew their
actions made things more expensive or
difficult or impossible defendants
interference harmed plaintiffs by
artificially and negatively skewing the
data regarding customer acquisition via
affiliate links causing members of the
class to appear to to Merchant Partners
to underperform relative to actual
customer acquisition defendants conduct
was a substantial factor in causing
plaintiffs harm and the class and by
virtue of the foregoing plaintiffs and
members have been harmed in an amount
that exceeds $5 million that's the class
it it could be proven to be much more
than that the second cause of action
intentional interference with
prospective economic relations it's
going to be relatively the same thing
you you interfered with existing
relations you interfered with
prospective relations another $5 million
claim basically if we are
underperforming as YouTuber influencers
as social media influencers uh you know
you're not going to hire us you're going
to hire us for less money or you're not
going to hire us so therefore you've
interfered with prospective economic
relations injunctive
relief plaintiff also seeks injunctive
relief which is appropriate where there
is a threat of continuing misconduct
these paragraphs themselves are not
going to be enough to get injunctive
relief so we're going to see a motion
for in the injunctive relief uh for a
preliminary injunction uh very soon um I
guess whenever they feel like it but uh
yeah a motion for um preliminary
injunction to ask the court to order
PayPal or honey to stop conducting
operations like this while we have the
litigation so they're asking for in
their prayer for Relief proper class
proper class action an award of Damages
actual damages nominal consequential
punitive exemplary damages as Allowed by
law to be determined at trial a
permanent injunction ordering defendant
to stop replacing affiliate cookies and
links prejudgment interest post-judgment
interest statutorily enhanced fees
attorney's fees cost litigation
expenses all other findings and
determinations identified and sought
leave to amend and any other relief and
it is filed by Christensen Law Group ekm
and legal eagle the eagle team LLP Devin
Stone right there so I think that's
pretty awesome we go up to the top there
you can see all of their official
everything's looks like it's a it's a
multi- attorney effort to hold PayPal
accountable for what they've what
they've been doing I did not know that
they were doing this it sounds like
everybody else didn't know they were
doing this and those that found out
about it quietly ended their
relationships with PayPal honey uh in
the in that in in that sense I don't
mean that nobody ever used PayPal again
I'd love it if I if I could stop but
it's a large company and so this is a
kind of a David and Goliath situation
even even large influencers like
Wendover are still in the dark that this
was happening until it was revealed when
someone found out that this was
happening so when over productionist
doesn't have to have a contract with
honey or terms of service with PayPal or
whatever uh even if there's no contract
between the plaintiffs and PayPal for
this for influencer sponsorship or
whatever they were also altering
affiliate links based on the US having
the extension so like the user could
view something on YouTube and then go to
try to purchase it and be using honey
and Wendover has nothing to do with
honey the entire time so yes that's a
very good point um the contract doesn't
matter I'm looking forward to seeing
this play out I doubt PayPal will settle
so I hope it's not a quiet settlement
but rather like a loud win um at the
same time you'll also notice the lawyers
the way we conduct ourselves when we're
not representing someone is different
from the way we conduct ourselves when
we are repes representing someone um I
can I can talk a heck of a lot more
about the wind over Productions lawsuit
than probably the lawyers that are
involved of course legal legal is going
to make a video but it's going to be
very carefully made because he has to be
very careful what he can say you don't
want to say something pre- litigation
that can then be brought into the
litigation um anything any a video that
legal eal makes or or whatever all of
that could end up being evidence that is
discoverable during the litigation and
could be discussed as part of a trial or
summary judgment motion it could be
something brought up before a jury so
you have to be very careful that's one
of the reasons I'm making this video is
so you can see what my impression was
separately from the attorneys actually
involved who will be acting on behalf of
their client
first that's their fiduciary duty so
very interesting situation I hope it's
something that works out for the
plaintiffs and it will be enjoyable for
all of us to watch and follow and
learn so I hope that uh you found that
interesting let me know what you think
in the comments
below oh and Happy New Year